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Wheat, corn give back some gains

Soybeans were modestly lower on fund and technical selling, unable to follow through on an attempted late rally. The uncertainty about phase one of the U.S./China trade deal continues to hang over the market. Wednesday, it was reported talks had stalled, with two of the primary issues Chinese purchases of U.S. ag goods and U.S. resistance to rolling back tariffs on Chinese goods. There were unconfirmed reports Chinese firms had purchased several cargoes of U.S. soybeans this week, even as U.S. soybeans sit in Chinese ports because of storage issues. Wednesday, the USDA did report unknown destinations bought 106,000 tons of 2019/20 U.S. soybeans. That might be China, but it also might not be China, and in any event, it’s not seven cargoes. Wednesday, the leaders of China and Brazil talked up diplomatic relations and Beijing has increased investment in Brazilian infrastructure, but Brazilian soybean exports to China could decline because of African swine fever. CONAB currently has Brazil’s 2019/20 soybean crop at 100.8 million tons, up slightly from the previous guess, but less than the USDA, with exports of 72 million tons. Soybean meal was higher and bean oil was lower on the adjustment of product spreads.

Corn was modestly lower on profit taking and technical selling. The corn harvest remains slower than average, with more snow in northern parts of the region against drier, but still cold, conditions in other areas. About a third of this year’s crop remains unharvested and some of that might be a total loss, especially in areas with early snowfall and tight propane supplies. Slow export demand is a big bearish factor and South American crop conditions mostly look good. Brazil’s ag ministry says that through October, Brazil has exported 34.7 million tons of corn, up 60% from the same period a year ago, while Allendale says U.S. exports are 36.2 million tons, down 40%. CONAB has Brazil’s 2019/20 corn crop at 98.37 million tons, below the USDA’s most recent projection. New USDA supply, demand, and production numbers are out December 10th. Ethanol futures were lower. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Thursday, while the USDA’s weekly export sales report is due Friday.

The wheat complex was lower on profit taking and technical selling, with Chicago and Kansas City leading the way down after leading the way up Tuesday. Winter wheat planting is nearly complete at 92% and emergence is only a little slower than normal. Export demand has been solid nearly halfway through the 2019/20 marketing year, but U.S. wheat still must contend with a projected record world supply. Weather related crop losses in some competing exporters have been offset by larger crops in other nations. Brazil could be an emerging market for U.S. wheat. The Brazilian government will allow imports of 750,000 tons of U.S. wheat with no tariffs and possible philosophical tensions between Brazil’s government and the new government in Argentina could also contribute to higher U.S. sales. Argentina is the biggest supplier of wheat to Brazil, all duty free under the Mercosur trade bloc. DTN says Jordan is tendering for 120,000 tons of wheat.

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